Chrysler may face a fine for selling Los Angeles store

Article by Christian Andrei, on October 11, 2011

The California Department of Motor Vehicles and Chrysler Group are in talks regarding the reconciliation of the department's allegations that the automaker has unlawfully run a factory-owned store in downtown Los Angeles. The DMV also charged Chrysler of creating fictitious claims to the department regarding the possession of the dealership, Motor Village LA.

Chrysler is utilizing the dealership to test new retail methods and to enhance exposure of its Dodge, Chrysler, Ram, Jeep and Fiat cars in Los Angeles, where its share of the market is small. Compensatory damages could be included in a settlement. When the DMV filed the allegations with the California Office of Administrative Hearings on Sept. 14, it requested that the automaker pay restitution to competing private Chrysler Group stores which are within 10 miles.

A DMV spokesperson refused to make a comment on the pending lawsuit. She stated that if the two parties can't decide on a settlement, a hearing will be scheduled, according to Autonews. Chrysler could face a fine, probation, warning or loss of its California license to sell automobiles.

Chrysler's head of network development and fleet, Peter Grady, informed Automotive News last week that the automaker is working to swiftly sell the 189,000-square-foot Motor Village store. The potential purchaser is Dennis Lin, who owns New Century Automotive Group in North Hollywood, Calif.

According to the agreement, which Grady anticipates to seal at the end of October, Lin will purchase the dealership, and Chrysler Realty will continue to possess the property. Grady refused to talk about how much lease Lin would shell out but commented that they now have a rent "that's competitive with what they [private dealers] pay themselves" on bank loans.

The California New Car Dealers Association has calculated the Motor Village's market rent at $200,000 monthly. Gwen Young, a Chrysler attorney, announced during a Sept. 27 meeting of the California New Motor Vehicle Board that the company was cooperating with the DMV on a settlement, adding that Chrysler Group "really does want to put all this behind it and move forward."

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